Willis Lease Finance Corporation (NASDAQ:WLFC) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement.
On August4, 2017, Willis Engine Structured Trust III (“WEST III”), a direct, wholly-owned subsidiary of Willis Lease Finance Corporation (“Willis”), closed its offering of $335.7 million in aggregate principal amount of fixed rate notes (the “Notes”). The Notes were issued in two series, with the SeriesA Notes issued in an aggregate principal amount of $293.7 million and the SeriesB Notes in an aggregate principal amount of $42 million. The Notes are secured by, among other things, WEST III’s direct and indirect interests in a portfolio of 56 engines.
The SeriesA Notes have a fixed coupon of 4.69%, an expected maturity of approximately 10 years and a final maturity date of August15, 2042 and SeriesB Notes will have a fixed coupon of 6.36%, an expected maturity of approximately 10 years and a final maturity date of August15, 2042. The SeriesA Notes were issued at a price of 99.91487% of par and the SeriesB Notes were issued at a price of 98.29606% of par. Principal on the Notes is payable monthly to the extent of available cash in accordance with a priority of payments included in the Indenture (as defined below). Proceeds from engine sales by WEST II will be used, at WEST III’s election subject to certain conditions, to reduce WEST III’s debt or to acquire other engines or aircraft.
In connection with this transaction, Willis and WEST III entered into a number of agreements, in addition to the Note Purchase Agreement previously reported on the Willis’ current report on Form8-K filed on July28, 2017, listed below:
1. Asset Purchase Agreement dated as of August4, 2017 by and between Willis, as seller, and WEST III, as purchaser, providing for, among other things, the sale by Willis to WEST III of the portfolio of 56 engines during a specified delivery period, by way of the sale of the beneficial ownership interests in trusts that each own one of the engines.
2. Trust Indenture dated as of August4, 2017 among WEST III, Deutsche Bank Trust Company Americas (“DBTCA”), as trustee and security trustee, Willis, as administrative agent, and BNP Paribas, as initial liquidity facility provider, providing for the issuance by WEST III of the Notes (the Indenture”). The Indenture contains customary covenants for offerings of this type that apply to WEST III and its subsidiaries (but not Willis and its subsidiaries other than WEST III)., including among others, limitations on incurrence of additional debt, limitations on distributions and dividends, limitations on asset dispositions, and a requirement to comply with certain concentration lease limits included in the Indenture. The Indenture also contains customary events of default.
to the Indenture, cash earned by WEST III will be collected in a pledged account, which will be used to service the Notes and any remaining amounts, after debt service and defined expenses, will be distributed to Willis. Additionally, amounts equal to a portion of WEST III’s maintenance costs (including maintenance reserve reimbursement obligations) and lease security deposit reimbursement obligations will be accumulated in pledged accounts and will be available to fund future maintenance events and to apply as security deposit amounts are permitted or required to be applied under the applicable lease, respectively.
3. Security Trust Agreement dated as of August4, 2017 among WEST III and DBTCA as security trustee (the “Security Trustee”) and operating bank (the “Security Trust Agreement”). to the Security Trust Agreement, WEST III grants, and each of WEST III’s future subsidiaries will grant, a security interest in substantially all of its assets to the Security Trustee for the benefit of the secured parties in the transaction. The assets of WEST III are not available to satisfy Willis’ obligations or those of any of our affiliates other than the obligations specific to WEST III.
